Assignment for Maurel & Prom: hedging oil price risks
Background / Issues
As oil prices are highly volatile, the company is encouraged by its banks to set up financial hedging instruments, but the low volumes hedged do not justify the implementation of a highly sophisticated risk monitoring system.
However, the constraints of IAS/IFRS apply with the same levels of stringency as for groups operating on large volumes.
Scope and target
Review of all hedging transactions in place
Audit of processing procedure
Validation of bank valuations
Work on three closings: one annual and two half-yearly
Teaching methods and tools
Checking writing patterns
Verification of valuations used at three accounting closing dates to validate data
General project management: communication, website, information, etc.
Results
Proposed improvements to procedures
Secure accounting processing